Mortgage & Finance
How to Build Credit If You Have None
You need a credit history to get credit. Luckily it’s not hard to establish credit if you’d invest a little time to learn some smart ways that will enhance your borrowing profile. In this article, we’ll show you how to build a credit history if you’re just starting out.
1. Apply for a Store Card
Even though you have no credit history, many supermarkets stations will issue you a branded credit card. Use it but don’t overspend. At the end of the month, ensure you pay off the whole bill. Request that the retailer tell credit bureaus about your credit history.
2. Use a Co-Signer
One of the smart ways you can build your credit in a short time is through a co-signer. Basically, you are leveraging the established credit profile of someone you know. But be sure that you and the co-signer understand that if you don’t pay, the co-signer will be responsible for the full amount owed.
3. Become an Authorised User
A significant other or family member might agree to add you on his or her card as an authorised user. Doing this attaches the spending history of the account to your credit accounts. So, it’s best to go for a key customer with a long history of paying on time.
Additionally, being added as an authorised user may reduce the time required to generate a FICO score.
Before you are added as an authorised user, you will have to come to an understanding about how you can use the card and be willing to pay your part if that is the compromise that you make.
4. Apply for A Credit Card
Credit cards are a great way to build credit, provided you are responsible with the card and don’t start treating it as if it were free money you don’t have to repay – because you do!
Try as much as possible to pay your bills on time and always pay at least your minimum monthly payment that is due.This will start to prove your creditworthiness, even though the card is not useful for making big purchases.
Take your time in finding a credit card that suits yours needs to ensure that you are getting the best possible interest rates and that your credit limit Isn’t too low or too high for what you need and, more importantly, can afford to repay.
5. Paying Bills? Get the Credit
Use a rent-reporting service like CreditLadder to report your credit and payment history to Experian. The service can take a bill you already paid and add it on your credit history to help you create a strong on-time payment history. Not all credit bureaus consider these payments, but some do, so it is worth exploring.
It can be difficult to build credit when you have no credit history. But there are smart ways to make the process less intimidating. And these include applying for a store card, become an authorised user, applying for a secured credit card, leveraging a co-signing and getting credit for paying your bills on time.